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February : National Minimum Wage Agreement has now been signed

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13 February, 2017

National Minimum Wage Agreement has now been signed

Following negotiations at Nedlac, the above Agreement was signed by the parties involved (with the exception of Cosatu) on Tuesday 7 February 2017.  The said agreement is attached for your information.  The most important points of the Agreement are as follows:

  • NMW set at R20.00 per hour to take effect from 1 May 2018.
  • All Sectoral Determinations, collective bargaining agreements and individual employment contracts to be aligned with NMW when implemented.
  • However, Agriculture and Forestry minimum wage at 1 May 2018 to be 90% of this amount (i.e. R18.00 per hour).
  • A code of good practice for collective bargaining, industrial action and picketing, as well as an accord on collective bargaining and industrial action will accompany the Agreement.
  • Employers can apply to DoL for an exemption. Such exemptions will only be granted if financial hardship can be substantiated and will only be granted for a maximum of 12 months.
  • A National Minimum Wage Commission (NMWC) will be established to review the minimum wage adjustment every year.

Before the NMW Bill can become law it will have to follow due process which will undoubtedly take some considerable time.  This includes the following:

  • being drafted and Gazetted;
  • going through the Parliamentary approval process;
  • going through a public engagement process; and
  • being subjected to a Socio-Economic Impact Assessment.

There are a number of issues which we as an Industry would like clarity on.  These are as follows:

  1. The minimum wage contained in the current Forestry Sectoral Determination is based on the Industry norm of a 45 hour working week, not a 40 hour working week as provided for in the NMW Agreement.  The new minimum wage for forestry workers i.t.o. the current Forestry Sectoral Determination will be increased by 8% to R3 001.13 per month or R15.39 per hour with effect from 1 March 2018.  By 1 May 2018 this will increase to R18.00 per hour - an increase of R2.61 or 17.0%.  However, if looked at from a monthly perspective, and based on a 45 hour week, the monthly wage could increase from R3 001.13 to R3 870.00 - an increase of R868.87 per month or 29.0%.  How can this substantial increase be ameliorated?
  2. Theoretically, in terms of the current Forestry Sectoral Determination, a new minimum wage, based on CPI +1% will become effective on 1 March 2018.  However, it is envisaged that the NMW would become effective on 1 May 2018 - only two months later.  What, therefore, would the minimum wage be for the two month gap between 1 March and 1 May 2018?
  3. Following the introduction of the NMW, what would the future status of Sectoral Determinations, including our own, be - would they remain in place or fall away?
  4. According to the provisions contained in the NMW Agreement, the Agricultural and Forestry NMW would be 90% of R20.00 per hour (i.e. R18.00 per hour) w.e.f. from 1 May 2018 rising to 100% of the NMW w.e.f. 1 May 2019.  Would the new NMW on 1 May 2019 be R20.00 per hour or 100% of whatever the NWM may have increased to by that date?

Organised Agriculture will be given an opportunity to comment on the Bill once Gazetted for public comment.  We will of course keep members informed of developments and working with Agri SA, make the necessary submissions to ensure that our members' interests are not adversely affected.

Download the : Agreement of the introduction of a National Minumum Wage

Source: Forestry South Africa